AirAsia India set to begin operations from Thursday

The domestic aviation space is allset to witness severe competition with the entry of AirAsia India, which starts operation from Thursday.

AirAsia India, the Indian arm of the Malaysian no-frills airline headed by Tony Fernandes, will become the fourth budget carrier in the country - after IndiGo, SpiceJet and GoAir - once its maiden flight takes off from Bangalore to Goa at 15:10am on Thursday.

Besides these, the Naresh Goyal-promoted full service airline Jet Airways also operates a low-cost service JetLite.

As of now among the domestic carriers, including full service ones, Rahul Bhatia-promoted IndiGo dominates the local market with 31.6% share, followed by Jet Airways-JetLite combine with 21.8% and Air India with 18.3%, according to Directorate General of Civil Aviation data for April traffic.

While SpiceJet had a 17.9% market share in April this year, GoAir had 9.5%.

AirAsia India, whose top officials have promised to offer low and competitive airfares, will focus on connecting tier-II cities to begin with.

"Our airlines' fares will be about 35% lower than the current market rates," AirAsia India Chief Executive Mittu Chandilya had earlier said.

The new entrant has already triggered the fare war by announcing fares as low as Rs 990 for its Bangalore-Goa and Bangalore-Chennai routes, forcing the rival carriers, including IndiGo to come out with matching fares.

IndiGo also announced promotional fares for just Re 1 on the Bangalore, Chennai and Goa routes, taking on the competition from AirAsia India's Rs 5 fare (excluding airport tax and other applicable fees) offer and putting on sale over 25,000 promotional seats with travel period validity up to October 25.

Leaping up the AirAsia India offer, the flyers rushed to book a seat at dream prices and the airline sold out the entire flight within 10 minutes of opening for sales.

Not only this, 25,000 seats were also booked within 48 hours of the announcement.

Other budget carriers have also been on a low-fare spree with SpiceJet coming out with as many as 13 such offers since January this year till date with the most recent being Rs 1,999 offer on eight cities from South India.

Interestingly, AirAsia India has made Chennai its hub, which also happens to be the base of SpiceJet, promoted by media baron Kalanithi Maran.

The Indian subsidiary of the Malaysian carrier plans to have a fleet of 10 aircrafts, drawn from A-320 family, within a year of starting operations.

On March 22, AirAsia India received its first A-320 aircraft, configured in an all-economy layout, with 180 seats.

At present, AirAsia, through its operations based in Thailand and Malaysia, flies to Chennai, Bangalore, Kochi, Tiruchirappalli and Kolkata from several destinations in the ASEAN region.

AirAsia had announced its joint venture with Tata Sons and Telestra Tradeplace in February 2013, four months after the then UPA government allowed up to 49% FDI in domestic airlines by foreign carriers.